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Welfare Rankings From Multivariate Data, A Non-Parametric Approach

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  • Gordon Anderson
  • Ian Crawford
  • Andrew Leicester

Abstract

Economic and Social Welfare is inherently multidimensional. However choosing a measure which combines several indicators is difficult and may have unintended and undesireable effects on the incentives for policymakers. We develope a nonparametric empirical method for deriving welfare rankings based on data envelopment which avoids the need to specify a weighting scheme. The results are valid for all possible social welfare functions which share certain cannonical properties. We apply this method to data on human development.

Suggested Citation

  • Gordon Anderson & Ian Crawford & Andrew Leicester, 2010. "Welfare Rankings From Multivariate Data, A Non-Parametric Approach," Working Papers tecipa-386, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-386
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    References listed on IDEAS

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    1. Gordon Anderson & Ian Crawford & Andrew Leicester, 2008. "Efficiency Analysis and the Lower Convex Hull Approach," Palgrave Macmillan Books, in: Nanak Kakwani & Jacques Silber (ed.), Quantitative Approaches to Multidimensional Poverty Measurement, chapter 10, pages 176-191, Palgrave Macmillan.
    2. Angus Deaton, 1979. "The Distance Function in Consumer Behaviour with Applications to Index Numbers and Optimal Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 391-405.
    3. François Bourguignon & Satya R. Chakravarty, 2019. "The Measurement of Multidimensional Poverty," Themes in Economics, in: Satya R. Chakravarty (ed.), Poverty, Social Exclusion and Stochastic Dominance, pages 83-107, Springer.
    4. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, vol. 68(6), pages 1435-1464, November.
    5. Xavier Ramos & Jacques Silber, 2005. "On The Application Of Efficiency Analysis To The Study Of The Dimensions Of Human Development," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 285-309, June.
    6. Nanak Kakwani & Jacques Silber (ed.), 2008. "Quantitative Approaches to Multidimensional Poverty Measurement," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-58235-4, October.
    7. Maasoumi, Esfandiar, 1986. "The Measurement and Decomposition of Multi-dimensional Inequality," Econometrica, Econometric Society, vol. 54(4), pages 991-997, July.
    8. Serge-Christophe Kolm, 1977. "Multidimensional Egalitarianisms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(1), pages 1-13.
    9. A. Atkinson, 2003. "Multidimensional Deprivation: Contrasting Social Welfare and Counting Approaches," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 1(1), pages 51-65, April.
    10. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, September.
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    Cited by:

    1. Lefebvre, M. & Perelman, S. & Pestieau, P., 2015. "Productivity and performance in the public sector," LIDAM Discussion Papers CORE 2015052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Schröder, Carsten & Bönke, Timm, 2012. "Country inequality rankings and conversion schemes," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-43.
    3. Garcia-Diaz Rocio, 2013. "Poverty Orderings with Asymmetric Attributes," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 347-361, June.
    4. Stergios Athanassoglou, 2013. "Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote," Working Papers 2013.40, Fondazione Eni Enrico Mattei.
    5. Anderson, Gordon, 2011. "Polarization measurement and inference in many dimensions when subgroups can not be identified," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-19.
    6. Athanassoglou, Stergios, 2015. "Revisiting Worst-case DEA for Composite Indicators," Climate Change and Sustainable Development 198712, Fondazione Eni Enrico Mattei (FEEM).
    7. Anderson, Gordon & Farcomeni, Alessio & Pittau, Maria Grazia & Zelli, Roberto, 2016. "A new approach to measuring and studying the characteristics of class membership: Examining poverty, inequality and polarization in urban China," Journal of Econometrics, Elsevier, vol. 191(2), pages 348-359.
    8. Gordon Anderson & Teng Wah Leo, 2014. "Ranking Alternative Non-Combinable Prospects: A Stochastic Dominance Based Route to the Second Best Solution," Working Papers tecipa-520, University of Toronto, Department of Economics.
    9. Meital Izraelov & Jacques Silber, 2019. "An assessment of the global food security index," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(5), pages 1135-1152, October.
    10. Gordon Anderson & Oliver Linton & Teng Leo, 2012. "A polarization-cohesion perspective on cross-country convergence," Journal of Economic Growth, Springer, vol. 17(1), pages 49-69, March.
    11. Argyris, Nikolaos & Østerdal, Lars Peter & Hussain, M. Azhar, 2023. "Value-driven Multidimensional Welfare Analysis: A Dominance Approach with Application to Comparisons of European Populations," Working Papers 12-2023, Copenhagen Business School, Department of Economics.
    12. Amado, Carla A.F. & São José, José M.S. & Santos, Sérgio P., 2016. "Measuring active ageing: A Data Envelopment Analysis approach," European Journal of Operational Research, Elsevier, vol. 255(1), pages 207-223.
    13. Stergios Athanassoglou, 2015. "Multidimensional welfare rankings under weight imprecision: a social choice perspective," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(4), pages 719-744, April.
    14. Vrachimis Konstantinos & Zachariadis Marios, 2013. "A contribution to the empirics of welfare growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 213-244, April.
    15. Rogge, Nicky, 2018. "Composite indicators as generalized benefit-of-the-doubt weighted averages," European Journal of Operational Research, Elsevier, vol. 267(1), pages 381-392.
    16. Athanassoglou, Stergios, 2013. "Multidimensional welfare rankings," MPRA Paper 51642, University Library of Munich, Germany.
    17. Briec, Walter & Dumas, Audrey & Stenger, Agathe, 2013. "On the standard achievement and well-being indexes and their relation to the Hicks–Moorsteen productivity index," Economic Modelling, Elsevier, vol. 35(C), pages 900-909.
    18. Joanne Haddad & Jad Chaaban & Ali Chalak & Hala Ghattas, 2022. "Does Income Class Affect Life Satisfaction? New Evidence from Cross-Country Microdata," Social Sciences, MDPI, vol. 11(6), pages 1-23, June.
    19. Stergios Athanassoglou, 2016. "Revisiting Worst-Case DEA for Composite Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1259-1272, September.

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    More about this item

    Keywords

    Welfare Rankings; Data Envelopment; Human development;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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